The housing market in 2021 will hold steady in many of the ways that were seen in 2020. Across the nation home inventory has been has been at historic lows, despite an up tick of new construction. Interest rates are expected to remain low, although there will be a gradual increase through 2021. Average home prices will continue to rise. Renters hurt by the pandemic will continue to struggle.
Home buyers are forcing the market to change the style of homes being listed and built. Many seek homes with more space, causing many to look to the suburbs. This has force national demand through the roof in 2020. Where home prices steadily grew and unemployment skyrocketed, many expected a housing crash. Instead the market flourished, with many seeking to move to larger homes in the suburbs. 2021 will continue to see sellers remain in the drivers seat. This will mean buyers will need to stay emotionally separated during the home buying process and rely on their agent to get them into the home of their dreams.
With sellers in control, a major contributor to the low supply of resale homes in 2020, was the fact that homeowner chose not to relocate. Refinancing at the historic low interest rates meant homeowners could keep their mortgages low. The lower interest rates meant a conundrum had formed. Where it was an opportune time to buy a home, homeowners also found they could save money and remain in their homes. Resale sellers also served to keep the inventory low. When they sold in their local neighborhood, they tended to stay in the same market by buying larger homes in the suburbs.
Increase in home prices may entice owners to sell. Nationally in 2020 home prices rose about 7.6% over 2019. Realtor.com predicts 2021 will yield another 5.7% in increased home prices nationally. In Albuquerque and surrounding areas the median sale price rose 14% in 2020 where new listings fell 5.7% according to InfoSparks. 2021 will continue to see sellers remain in the drivers seat with inventory and interest rates remaining low.
The economic impact of the pandemic has been far more devastating to renters than it has been on homeowners. High unemployment rates in the retail and service industries have impacted tenants ability to afford rent. Nationally, as of December 2020, only 75% of apartment household made full or partial rent payments. This is a drop from 80% in November 2020. Eviction moratoriums have helped stave off mass evictions, but many fear what will happen when the moratoriums are lifted.
In order to help increase inventory the U.S. Census Bureau has said the new home construction companies have stepped up new housing starts in November 2020 to 1.5 million. This is 1.2% higher than October 2020 and 12.8% higher than the same time in 2019. Realtor.com predicts housing starts will be up 9% in 2021 as compared to 2020. This, however, still will not keep up with homebuyer activity in 2021.
If you would like more information on the national, New Mexico or Albuquerque area housing stats or any other real estate questions; call, text or email Troy Larson. You can reach him by phone at (505) 393-7012 or by email at firstname.lastname@example.org
The information presented here is the opinion, views and writings of Troy Larson. They do not represent the opinion, views or writings of any other person, entity or company.